A Debate Over Swedish Health Care Reform

The following exchange typifies the Canadian dialogue over our failing Medicare model. Characterized on the one hand by passions, both the desire to improve the system and ideological refusal to admit its faults, the debate also demonstrates considerable misinformation about the nature and meaning of workable alternatives. As part of its Healthcare Frontiers Project, the Frontier Centre originally led the drive to provide accurate information on the seminal healthcare reforms undertaken by Stockholm’s County Council more than a decade ago.

We are happy to cite Catherine Mitchell’s editorial, which originally appeared in the Winnipeg Free Press on December 8, 2005, which endorses the Stockholm model’s consumer focus, and regret that we failed to convince Leslie Roos, Noralou Roos or Raisa Deber, who responded to Mitchell’s piece in an op-ed published December 18, 2005. Frontier advisory board member Johan Hjertqvist, provided a direct response to Roos et al which was published on the same date. We present that fascinating exchange in toto, in that order.

1. Profitable health care: it beats waiting

Editorial column by Catherine Mitchell, December 8, 2005

Why do the defenders of medicare always point to the United States to scare Canadians off discussions about an expansion of private health care in Canada? The two countries’ systems of health care are like night and day. I don’t know any Canadian advocating to provide medicare to the destitute alone as the U.S. does.

Unfortunately, in Canada, people love to equate two-tier health care with the American model.

Slowly, people are recognizing two-tier health has been in Canada for decades, perhaps forever—you know when Jack Layton admits it to be so, it’s got to be gaining acceptance, at least among those not running to be prime minister.

So why the fear and loathing of private health clinics and hospitals?

I have loads of respect for Noralou Roos. She’s a great lunch date and an eminent health researcher. She is Manitoba’s own. In fact, she has the Order of Canada; I have won no awards, although I am a member of the Order of the Buffalo Hunt. (No, really). But she and I disagree on the merits and dangers of opening Canada’s medicare system up to some competition or help, as I would characterize it, from the private sector.

We disagree about the usefulness of private clinics, such as the one Mark Godley has brought to Manitoba, but which has been hamstrung by a provincial government decidedly hostile to the idea of private health care. Hostile to the point of making it illegal for private clinics to offer publicly insured services, unless with the imprimatur of the minister himself.

But Noralou Roos and her colleagues, writing on this page, are urging the minister to charge Godley if he dares to serve a Manitoban with an MRI or a hip replacement, for example.
Personally, I can’t wait for this tiff between Godley and Health Minister Tim Sale to get legal—my bets are on Godley. Imagine defending the power to decide when sick people will get treated and where. Oh wait, that fight’s been fought already. At the Supreme Court of Canada, last summer. Medicare’s monopoly lost.

Manitobans know why. Especially those waiting many months to be relieved of pain. And there’s those who keep Godley in business and the doctors and the 50 or so nurses he’s got on his roster—who also work in the hospitals and the like.

Canadians have ample experience in dealing with private health care—to the tune of $32 billion in spending every year. Even Prof. Raisa Deber’s research paper, prepared for the Romanow Commission in 2002, found mixed results from the attempts to measure the good and the bad of private-for-profits versus not-for-profits. She found it’s difficult to compare them. She notes private operations make money by charging for extras and cutting costs. That’s called private enterprise. I don’t care if the nurse or technician on my case is unionized and taking 15-minute breaks on schedule. I care that they know what they’re doing.

They also make money by offering patients speedy service. I doubt I could afford an MRI at Godley’s clinic. But if others ahead of me can, I say let them get out of the way.

Roos et al. insist that private operators like Godley should not be allowed to expand because a) they will make a profit and b) they will offer diagnostic tests. Research shows, they note, that Canadians already are getting too many unnecessary MRIs and other tests.

That’s an argument for better clinical guidelines, not for preserving wait lists so hospitals alone can deliver meaningless, expensive tests. I don’t look to the American way. I look to Europe, where private/public health systems are the norm. Where, in Sweden, citizens have traded the old and tired sacred cow of monopolistic, publicly administered health for a shiny, efficient private hospital that actually delivers care when needed, not when government says it can provide. If you want to read more on that revolution, e-mail me. I’ll send you a paper on the Swedish experience.

Sweden’s not going to happen here tomorrow. Sigh.

But we could all benefit if government and medicare purists would stop chasing away (or into court) the few daring business types who want to offer a little choice.

Catherine Mitchell is an editorial columnist for the Winnipeg Free Press.

2. Odd that Sweden is darling of pundits

Op-ed by Leslie Roos, Noralou Roos and Raisa Deber, December 18, 2005

Catherine Mitchell is sorry Sweden won’t happen here tomorrow. We presume that she is not referring to Sweden’s choice to have one of the highest tax rates in the world in exchange for more generous social programs.

For example, Sweden pays for about 85 per cent of health expenditures from public sources, in comparison to about 70 per cent in Canada. This includes public coverage not only for hospitals and physicians, but also for drugs and dental care (for kids up to the age of 20 it’s free, and for adults it is subsidized).

While a sizable number of Canadians lack drug coverage, Swedes do not. Sweden also has generous sick leave coverage, great parental leave benefits for both mom and dad, a national child allowance until the child is 16 (with larger payments for more children), and even a pension system which counts time spent at home looking after the kids.

Oddly, Sweden has recently become the darling of Canadian commentators wishing to privatize how we fund and deliver health care. The picture they paint is often not recognizable to Swedes.

So, yes, for historical reasons, Swedes may pay user fees when they see the doctor or stay in hospital. These fees are capped and geared to income; computing them does add some administrative costs that Canada can avoid. But, in stark contrast to Canada, these patient fees account for only about four per cent of health-care costs in Sweden. They also have reference-based pricing to control pharmaceutical costs—the B.C. system, which Manitoba probably should adopt as well.

So, to be more like Sweden, we should probably be paying more of the bill publicly, not less.

In terms of delivery, Sweden began with publicly owned and operated hospitals, run by local governments (county councils). In Canada, by contrast, our “public” hospitals are not-for-profit private organizations, with considerably more managerial autonomy (although we do grant that attempts by provincial governments to induce “accountability” within regional health authorities may indeed be moving us closer to de facto public control.)

As the New Public Management movement confirms, publicly run institutions are often seen as cumbersome, and local officials may lack the skills to manage them. (On a visit to Sweden several years ago, one of us recalls complaints from hospital administrators that the county councillors kept coming in to count the sheets.)

Several years ago, some councils experimented with contracting out these services to private hospitals. Although reports are mixed, we note that Swedes were unhappy enough that some of the privatizations were reversed. In 2004, they banned further privatization of hospitals. Instead, the Swedes are seeking to move from the older focus on market-based mechanisms to approaches looking for greater co-operation among providers.

It is always dangerous to generalize about other countries on the basis of limited information, but all countries have both advantages and disadvantages. Sweden has an excellent system, with room for improvement. So, we maintain, does Canada. We are left to wonder exactly how much and which part of the Swedish system should happen here tomorrow, and whether Swedish commentators might be yearning for elements of the Canadian system.

You can go to the official Swedish website to read all this and more for yourself: http://www.sweden.se/templates/cs/BasicFactsheet____3978.aspx http://www.euro.who.int/document/Obs/SWEsum112002.pdf http://muse.jhu.edu/journals/journal_of_health_politics_policy_and_law/v025/25.5diderichsen.html#authbio http://bmj.bmjjournals.com/cgi/content/full/328/7438/484-c

Leslie Roos and Noralou Roos are professors in community health sciences at the University of Manitoba. Raisa Deber is a professor in the department of health policy, management and evaluation at the University of Toronto.

3. Sweden’s reforms work, and are here to stay

Op-ed by Johan Hjertqvist, December 18, 2005

What is the most important lesson from the Swedish reforms to health service provision during the first half of the 1990s, one that has unfortunately failed to register with Roos, Roos and Draber? That it is possible to improve the function of a public system by introducing better incentives, mechanisms like contracting care to independent providers, payments to hospitals based on the volume of services they perform, and converting the administration of public facilities towards a business model rather than a bureaucratic one.

I dare to add that the health of the public system has been maintained only by the injection of new ideas and market mechanisms into the old structures. Without such reforms, neither Britain’s National Health Service nor Sweden’s public healthcare system would have survived.

In the Stockholm region, the public health care reform process started 15 years ago and has showed significant progress. Productivity increased by 20 per cent because, instead of dealing with a captive market, providers now faced competition for their services. That in turn brought lower costs per treatment and radically better access as waiting lines almost disappeared. Opening the previously closed production area to a large number of contracted service providers — who are generally privately owned and who now deliver 45 per cent of primary care services — increased the quality of care and sent a signal to public players to improve, which they did.

As a reflection of the support for reform among all trade unions in health care, around 200 new service companies were established, enterprises owned by doctors, nurses, midwifes and other care providers. The labour market for health professionals underwent a dramatic, positive transition. Today a nurse negotiates her (or his) own salary as a part of the contract to deliver services, and the nurses’ union runs a company advising their members how to become entrepreneurs.

The most important tools used to achieve this change were:

a purchaser-provider split, to eliminate the conflict of interest when the same authority simultaneously sets budgets and delivers services;

a reimbursement reform, whereby global hospital budgets were replaced with a system that pays only for services that are actually delivered;

the incorporation of all public hospitals into business models (and even selling Stockholm’s largest one to a private, for-profit group; and

as said, the creation of a market that includes public and private providers.

Patients were given the right to move across county borders to access more timely and better care. They bring their public funding with them, supported by an access guarantee that limits the maximum waiting time to 90 days.

As rightly reported by the good professors, today some important components of these reforms have, sadly enough, withered away. For political and ideological reasons, the present Social Democratic government has even banned more for-profit hospitals working within the public scheme. This will hardly solve their problems.

But the essential parts of the original reforms remain. Competition for service contracts is today a part of Swedish law, the incorporated hospitals are still there, and very few believe that public providers on their own can deliver high-quality, timely services. The Swedish government was forced to accept a national access guarantee. Public voucher systems are common, offering the consumer a choice between care providers and the mobility-of-access-guarantee can be described as a national voucher system.

Consumer free choice within Sweden is now a pillar of public healthcare. As international competition for health care services increases, this will not be enough. Neither Canadians nor Swedes will in future years accept a low-performing healthcare system. Canada will develop a private, parallel insurance system and Swedes, who already have access to private healthcare insurance, will start going abroad for treatments inside a European Union service market.

The global pressure for reform is building. Nothing in Sweden will ever be the same again. Canada’s government faces the same pressures, and will be forced by public demand to undertake similar reforms. The sooner, the better.

Johan Hjertqvist, formerly a healthcare consultant to Stockholm’s County Council and the head of the Health Policy Unit at Timbro, a Swedish think tank, is the founder and president of the Health Consumer Powerhouse in Brussels, Belgium.